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The Weekly Rap! Friday April 11th, 2014

I just got my own personal mobile phone App for your smart phone! This will replace my business card as you will always have it with you. You can download it on your mobile phone. It gives you all my contact info with links to my social media sites including: my blog and this Weekly Rap, mortgage and real estate news, a very useful mortgage calculator and more. You can share it with others simply by hitting “share” in the App and texting it to their cell phone. CLICK HERE FROM YOUR SMART PHONE TO ADD: http://bbartok.mortgagemapp.com/mobile

The National Debt is currently: $17,574,181,702,957.00is higher by about 28 BILLION. I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,089 about 400 pts. lower than where it was last Friday. The S&P 500 is trading at 1,826. Gold is trading at $1,318 an ounce, while oil futures at $104.17 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.75/Gal.

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 104.65 about .50 belter than where we were last Friday at this time. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. The higher the number (price), the better the rate.

In economic news this week; The reader’s digest version is consumer credit is rising, small business optimism is on the rise, the Federal budget (although not balanced and bleeding cash) is getting smaller, our local real estate market is heating up, and employment looks to be improving.

Consumer Credit climbed 6.4% or $16.5 billion in February, mainly due to college loans and auto purchases as reported by the Fed Gods. Consumer credit rose 5.3% in January, 7.0% in December and 5.5% in November. Consumer debt has risen every month since August 2011. Non-revolving credit such as federal student loans jumped 10.1%, or $18.9 billion, in February. Credit-card debt fell by 3.4%, or $2.4 billion. That’s the second straight decline in credit-card debt. Credit card debt has barely risen since 2010, but non-revolving loans have jumped nearly 26% since then.

A measure of small-business optimism improved in March but still didn’t surpass January levels. The National Federation of Independent Business said its small-business “optimism” index rose 2 points to 93.4, helped in particular by those who expect real sales to be higher. The best component, at positive 24%, is “plans to make capital outlays,” and the worst component, at negative 24%, is “earnings trends.”

The Fed Gods apparently had a secret video conference call in early March and reached a general consensus that the 6.5% unemployment rate threshold for the first rate hike was outdated. A summary of the video conference was included in the minutes of the Fed’s March 18-19 meeting released by the Fed. The Gods were clearly worried that changing the forward guidance would impact markets. They noted that, going into the video conference, the Fed and the markets were on the same page about the outlook for short-term interest rates.

After the meeting, the Fed policy committee statement took out any reference to an unemployment rate of 6.5% as a possible threshold to consider raising short term rates. Instead, the Fed said it will “take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments” before deciding to raise short-term rates.

The U.S. budget deficit narrowed sharply in March, the Treasury Department reported, as tax receipts climbed and government spending fell broadly. The government’s shortfall was $37 billion, down 65% compared to the March 2013 deficit of $107 billion. The government’s deficit has been steadily improving. With the March figures, the shortfall for the first six months of the 2014 fiscal year is $413 billion. The year-to-date deficit is down 31% from the same period a year ago.

U.S. producer prices, or inflation at the wholesale level, rose 0.5% in March at the fastest rate in nine months, owing largely to higher costs experienced by clothing retailers, grocers and wholesalers of chemical goods. That’s the largest increase since last June and surpassed the 0.1% estimates. The wholesale cost of services surged 0.7%, the biggest spike in more than three years, to push the index higher. Excluding the volatile categories of food and energy, so-called core producer prices jumped 0.6% last month. The spike in prices pushed the year-over-year increase in wholesale costs to 1.4% from just 0.9% in February. That’s the highest rate since last August.

A gauge of consumer sentiment is the highest in nine months, with sunnier views on both current and upcoming economic conditions, according to data released this morning. Markets watch sentiment levels to get a feeling for the direction of consumer spending. The overall consumer-sentiment gauge from the University of Michigan and Thomson Reuters rose to a preliminary reading of 82.6 in April, the highest since July, from a final March level of 80. For context, the gauge average is 86.9 over the year leading up to the start of the recession.

On the Real Estate front: Local data (El Dorado Hills to Placerville) is out for the month ending March 14th. New Listings are up 39% from February, up 206% from December, and 10% from 1 year ago. Homes currently for sale are up 7% from February, up 10% from December, and 36% from 1 year ago. Pending Sales are up 54% from February, up 100% from December, and 1.8% from 1 year ago. The Average price per square ft. is up 4.4% from February, up 5.8% from December, and 17% from 1 year ago. The average “days-on-market” is currently 67 from 74 in February. The average “months-of-inventory” is down to 3.4 from 4.5 last month. The median sold price was higher by almost 15% from February and almost 20% higher than last year at this time. What does this mean for our real estate market you ask? Well, prices are on the rise, more homes are being listed/sold, and more buyers are entering into contract. Our market is heating up!

On the Employment front: Job openings at U.S. workplaces rose to 4.17 million in February, the most in just over six years, from 3.87 million in January. Compared with same period in the prior year, February job openings rose 4%, as private-sector openings increased 5% to 3.78 million, and government positions declined. With 10.46 million unemployed people in February, there were about 2.5 potential job seekers per opening, below January’s ratio of 2.6. In February 2013, there were 12.05 million unemployed people, about 3 potential seekers per opening. When the recession began in December 2007, there were less than two potential job seekers per opening.

Once older workers lose a job, they face steep obstacles in getting rehired, and equally difficult financial challenges in managing a bout of long-term unemployment, including the prospect of never working again. On average, workers age 55 and up were unemployed for 45.6 weeks, compared with 34.7 weeks for workers younger than 55, according to AARP’s analysis of Bureau of Labor Statistics data from February.

The number of people who applied for U.S. unemployment benefits last week fell to a nearly seven-year low of 300,000, a sign the labor market might be experiencing a spring revival. Initial claims ended April 5 sank by 32,000 from a revised 332,000 in the prior week. The last time claims were that low was in May 2007, six months before the Great Recession began.